China seems to be facing tumultuous times of late as there are a lot of problems coming up. In the last 2 decades, the nation has managed to avert any major financial crisis, but it looks like the days ahead are going to be really hard for the nation.
The way the Chinese stock market prices have somersaulted has led to a huge debate as to how China may be going through a huge crisis. Despite the great concerns, the New York Times and even Fortune stated that the equity bubbles should not be used to speculate the future of China as the fears might be over exaggerated and hyped.
If we take a look at the short term picture, it can be seen that the odds of China going through a total crash may actually be an exaggeration because the crisis has so far impacted less than 15% of Chinese households. Even after the crash in stock prices, the composite index of Shanghai stock exchange is still 1000 points higher than what it was back in July 2014.
It would be wrong to write off China because the country can mobilize the economic growth by working upon the monetary policy which it has. It could expand the different fiscal measures and these steps can trigger the right changes which could salvage the situation.
This being said, China needs to be really careful because recklessness on its part can lead to huge economic collapse. The local government is facing immense competition and there are too many internal changes which are occurring as well. The economy is also facing the problem of industrial over capacity and thus the government needs to handle more than one areas of concern simultaneously.
While it is impossible to predict the future, one can surely conclude that China needs to implement strong measures at the earliest possible time..
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